Wednesday, October 17, 2012

An analyst, who has
spent the last five years telling investors to sell off Citigroup Inc. (NYSE:C)’s
shares, Michael Mayo, has now reversed his standpoint after the board has
replaced Vikram Pandit as CEO recently.

Mayo works in New York
for CLSA. He has changed his underperform rating as Pandit’s coup indicates
more proactive board, as per a note written by the analyst. The change may
result in additional restructuring and more dividends for stakeholders as the
company repairs its reliability with regulators.

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Chairman of Citigroup,
Michael O’Neil leads the board that has replaced Vikram Pandit with Michael
Corbat. The move could improve poor governance. He has not asked his clients to
buy shares of Citigroup based in New York since October, 2007, when the bank
was down with losses amounting to billions of dollars, associated with subprime
mortgages and other securities.

Mayo wrote in his note
that the change in leadership at Citigroup is a symbol of enhanced governance
by the board as compared to a decade of regulatory mishaps and risk management with
little or no responsibility. The change of CEO certainly imparts a greater and
better sense of accountability, even though a smoother transition was expected.

Citigroup directors
replaced Pandit after assessing his mismanagement of operations causing
negative outcomes with regulators and damaged reliability with investors.

Citigroup has gained 3.17%
to $38.43 in Wednesday’s session and rose 1.60% in yesterday’s session.

Citibank used to be the
largest US bank. It now stands as the third largest with $1.9 trillion in
assets. It follows JP Morgan and Bank of America.

New CEO of Citi,
Michael Corbet has been the CEO of Citigroup, Middle East and Africa division.
He also led Citi Holdings.

Pandit is often
credited for slimming the bank and removing it from the ownership of the government
after the bailout and righting its balance sheet after going through billions
in losses. He came under criticism for not being able to cut expenses enough
last year.